Commodity ETP assets at record, says ETF Securities

Global commodity exchange-traded product assets climbed to a record $207.4 billion in the third quarter as investors sought gold as a protection of wealth amid central bank stimulus, according to ETF Securities Ltd.

Commodity ETP assets rose by $31 billion in the period, the company said today in an e-mailed report. Gold assets in the products reached an all-time high $151.4 billion and the metal’s inflows of $7.7 billion was the most for any commodity and the largest since the second quarter of 2010, it said.

The Federal Reserve said Sept. 13 it will buy $40 billion of mortgage debt a month and the European Central Bank said earlier this month it stands ready to buy bonds of indebted governments that comply with rescue conditions. The Bank of Japan has said it will add to a fund that buys assets and China approved a $158 billion subways-to-roads construction plan.

“The rise in commodity ETP assets to a new record in 3Q 2012 was primarily driven by strong investor demand for gold and silver ETPs to hedge against currency debasement,” Nicholas Brooks, head of research and investment strategy at ETF Securities, said in the report. “Broad commodity and industrial metal ETPs also saw a pick-up in demand as central bank policies and improved U.S. data helped boost interest in more cyclical assets.”

Gold for immediate delivery advanced 13 percent to $1,773.83 an ounce in London this year and is heading for a 12th consecutive annual gain. The Standard & Poor’s GSCI gauge of 24 commodities added 2 percent since the beginning of January and rallied 11 percent in the third quarter.

Industrial Metals

Industrial metal ETPs had inflows of $81 million in the third quarter. Industrial ETP assets were $1.9 billion at the end of September, it said. Agriculture ETP assets were at $4 billion in the period, with outflows of $77 million, the fifth consecutive quarter of selling, ETF Securities said.

“As we move into the fourth quarter, demand for gold ETPs has continued unabated as investors anticipate further central bank easing through the rest of the year and into 2013,” Brooks said. “The demand for broad commodity and industrial metal ETPs will depend very much on whether the recent improvement in sentiment towards Europe and U.S. macro data proves to be sustainable or not.”